In an effort to revive World Trade talks, Franz Fischler offers to negotiate the end of all export subsidies, reports Seán Mac Connell, Agriculture Correspondent, in Killarney
Farm organisations have responded angrily to the offer from the EU to negotiate away all farm subsidies if other countries agree.
The initiative to try to revive the stalled World Trade negotiations was announced yesterday morning in Killarney by the EU Commissioner for Agriculture and Fisheries, Dr Franz Fischler.
The Irish Farmers' Association leader, Mr John Dillon, said he was deeply concerned at the move which was a threat to the beef and dairy sectors. Mr Pat O'Rourke, president of the Irish Creamery Milk Suppliers' Association, said he was shocked and dismayed; and the Irish Co-operative Organisation Society leader, Mr Donal Cashman, said it was a potential sell-out on Irish and EU agriculture.
Dr Fischler told a press conference at the informal meeting of farm ministers that he was prepared to negotiate an end to all export subsidies if other countries involved in the negotiations also did so. He said he would move on export subsidies if an acceptable outcome emerged on market access and domestic support and non-trade concerns, and if the EU got what he termed "strict parallelism" for all forms of export subsidisation in return.
Dr Fischler said it would be extremely difficult to get an agreement this year if a breakthrough in the negotiations could not be achieved before the summer.
He said it was common sense that if all World Trade Organisation (WTO) members wanted an agreement on a framework for modalities of the Doha Development Agenda, all the parties would have to move, including the EU. He believed a breakthrough was possible; he did not want the EU to hold up the process and would be putting the new offer in writing to all WTO ministers.
Everyone knew that agriculture was the key to achieving progress and already the EU had made deep cuts in direct and indirect subsidies. The US was spending $8 billion a year in trade distorting supports to the sector.
He said that existing loopholes, which left trade distorting farm support untouched, had to be closed and there needed to be a clear commitment that non-trade distorting supports should remain free of restrictions.
On the market access problem, Dr Fischler said those involved in the negotiations were miles apart and what was needed was a compromise in the form of what he called "a blended formula" for farm tariff reductions.
Such a formula would, with the necessary modifications, meet the concerns of all participants as well as the sensitivities of the developing countries. He was willing to sit down with countries such as India or Brazil to discuss how to address their concerns within this blended formula.
Dr Fischler said if an acceptable outcome emerged on market access and domestic support and non-trade concerns, and if the EU got strict parallelism for all forms of export subsidisation in return, progress could be made.
"This means that our international partners have to make clear that they are ready to fully match the EU on their forms of export support such as export credits, abuse of food aid or state trading enterprises.
"This offer is clearly conditional to the extent our American, Australian or Canadian friends will commit themselves to eliminate their forms of trade distorting export subsidisation."
Mr Cashman drew attention to two extracts from the letter, which he said could imply that the EU Commission is willing to consider eliminating export refunds. "Any reference to the elimination of export refunds is unacceptable and is a potential sell-out on Irish and EU agriculture. If refunds are eliminated, it is highly likely to force another reform of the milk sector including further price cuts. Such a reform would go beyond the Luxembourg agreement, which was agreed on the basis that it would provide the necessary milk reforms that would cater for the next WTO agreement," he said.
Mr Cashman said it is essential that the Agriculture Council, meeting in Killarney this week, sets out clear instructions for the Commission to stay within the Luxembourg CAP agreement as well as within the January 2003 offer to the WTO, which specifies limited reductions in the expenditure on export refunds but not their elimination.
Mr O'Rourke requested the Minister, Mr Walsh, to seek clarification from Commissioner Fischler and to remind him that any such reduction exceeds the mandate given to the Commission by the Council of Ministers. The ICMSA would not countenance any further adjustments beyond the mid-term review.
Mr Dillon expressed his deep concern at the chronic low-income problem in agriculture. He said that average farm income on drystock farms is only about €10,000 a year, and dairy farmers are facing major pressures from the support price cuts agreed by the Council of Ministers.
Mr Walsh broadly supported what was being proposed and welcomed the initiative.